Many of us missed out on credit card payments previously, either by coincidence or because we were waiting for our pay to pass. While this type of credit card delinquency is easy to resolve and may not even affect your credit score, if you make your credit card bill unpaid for several months, you risk developing credit card delinquency that can seriously damage your credit. Let me sue you.
Recovering from minor credit card delinquency is relatively easy, but there is a high cost to ignore you Credit card invoice For a long time. Your credit account will be closed and charged, your debt will be sent to the collection, and you can decorate your wages. Plus, you will be a lightly mark on your credit report Stay for up to 7 years.
This guide breaks down credit card delinquency in and out and categorizes what to do if you find yourself in this situation.
What is credit card delinquency?
If your credit card payment is delayed, your account will be considered arrears. Most credit card companies do not report late credit accounts to Credit Bury until payments are delayed for more than 30 days. Therefore, if you obtain and pay with your late credit card invoice within the time limit, your expiry invoice will not negatively affect your credit score.
However, if your credit account remains in arrears for 60 days, that information will be reported to the Credit Bureau, which will negatively affect your payment history. This is your most important element. FICO Credit Score. Not only will your credit score be affected, but your credit card issuer also Please raise your interest The Penalty Annual Rate (APR) Rate (APR) Rate is often very high, at around 29.99%.
If your account is in arrears of more than 90 days, the lender may decide to close your credit card account and send debts to the collection. Maybe your account is like that too It’s chargedYour credit score will appear as a mild mark on your credit report, which will give you serious damages.
Steps to recover from credit card delinquency
If your credit card account is late, there is no need to panic. Follow these steps to pull your account out of delinquency.
Step #1: Start payments immediately. If your credit account is over 30 days, prioritize making payments as soon as possible. You may have a hard time getting rewarded Credit card debtespecially when you start spiraling out of control, the earlier you can start paying, the more you can get out of late and get back on track.
Drew Wiard, owner of Clear Sky Properties, has personal experience of getting out of credit card delinquency. He says, “The first step is to pay right away. Momentum, not total. Delinquency increases rapidly, but even a small amount of payments indicates re-engagement.” He shares defeating $75 on his $3,000 balance, but “that little action has started to move.”
Step #2: Contact the credit card issuer. Many lenders have struggling programs designed to help consumers experiencing financial difficulties. For example, you may be able to cut your monthly payments. Credit Card Patience Plan This allows you to postpone payments for a certain period of time. Wiard was able to lower the interest rate after contacting the issuer. He said, “It’s uncomfortable, but many are surprisingly happy to work with you if you’re the truth.”
Msadvisory’s managing partner, Raoul PE Schweicher, said, “Be honest about whether you’re behind or simply missing out on your bill, whether you’re behind on your back, or whether (it) can open the door to support the program.” Schweicher also recommends requesting an “on and off menu” option to “prove that you’re serious about getting back on track.”
learn more: What is the Credit Card Difficulty Program?
Step #3: Contact a non-profit credit counselor. A credit counseling agency may be able to help you create Debt Management Plan (DMP) Card issuers that include monthly payments and perhaps lower interest rates. Please note that if you go this route, you may need to close your credit card account.
“When I contacted a nonprofit credit counselor, everything changed for me,” Weird says. “They taught me how to handle my money differently…”
Step #4: Make a payment plan at a debt collection agency. If you have already entered your collection of late credit card debt, you can also contact the debt collection agency directly to create a payment plan. You might be able to do it too Negotiate debt settlement This will allow you to resolve your debt by paying off most of your balance with the lump sum payment. Wiard said, “You should get everything in writing and never agree to pay more than you can realistically do.”
However, resolving your debts because less than you agreed to pay in the first place can hurt your credit score. A credit counselor will advise you on this step and help you determine if DMP or debt settlement makes more sense to you.
learn more: Debt relief tricks learned when I stopped paying credit card bills
The steps you should take after your account are no longer delinquent
Once you have obtained your credit card account from delinquency, it’s time to focus on keeping it out of delinquency and rebuilding your credit score if necessary. These steps are useful:
Change your credit card usage habits
The best way to proceed after delinquency is to take a closer look at your overall credit habits. Consider the following tips that will help you establish a more diligent credit habit and avoid future credit card delinquency.
Set up Autopay: If you manage multiple credit cards at once, remembering when to pay your credit card bill each month can be daunting. By setup Automatic payments, You avoid missing payments and possibly deferred fees or Penalty APR. Plus, your balance (or minimum payment) will be sent automatically, so you don’t have to worry about being late in making a payment.
Stop spending on credit cards: If you are worried about digging too big holes with a certain credit card, clean it up temporarily. Keeping up with payments and staying consistent with your credit card bills is much easier without adding debt. Put your credit card in your sock drawer and rely on a debit card for the time being.
Communicate with the publisher: If you are worried about being late in making your credit card payments, call the issuer to see how it can help. For example, you may be able to do it Negotiate a payment plan This reduces monthly payments. At the end of the day, asking questions never hurt.
Try removing the delinquent mark from your credit report
If you have late credit card debts that have not yet been charged and not sent to your collection, timely debt payments are the best way to reduce the impact of delinquency on your credit score. Your credit report will continue to show you that you missed some payments, but a strong history of on-time payments can overcome short-term delinquency.
Negative credit report items such as missed payments and collection accounts will usually fall from the report after 7 years. if Old debt It hasn’t been dropped from your credit report in 7 years, please contact us Three major credit bureaus (Equifax, Experian, Transunion).
Additionally, your credit report may have arrears obligations that are not actually yours. Therefore, it is important to request a copy of your credit report regularly. Disputes the error You will find it. If your credit report contains arrears obligations you are not aware of, remove the obligation as soon as possible. That way you can maintain the credit report and credit score you deserve.
Conclusion
Credit card delinquency can leave long-term negative marks on your credit report, but can be avoided with proper financial habits. If you are facing delinquency or are recovering from recent break-in, Use your credit responsibly It helps to prevent that from happening again.
Don’t forget: you have many resources at your freedom. You may ask about your credit card issuer’s difficult program, Certified Credit Counselor To come up with a debt management plan. If your credit score is high enough, you can also consider transferring your debt. Cards with Introductory APR Offer. This allows you to keep up with your payments without paying interest.
